Appointment of Distributors in Indonesia

 Appointment of distributors in Indonesia

Under the prevailing laws and regulations in Indonesia, the applicable regulations to appoint a distributor is governed under  Minister of Trade Regulation No. 11/M-DAG/PER/3/2006 regarding Provisions and Procedures for the Issuance of Registration Identity of Agents or Distributors of Goods and/or Services (“MT Regulation 11/ 2006”). MT Regulation 11/2006 defines a distributor as being a national trading company acting for and on behalf of the company on the basis of an agreement to purchase, store, and sell as well as to market goods and/or services owned or controlled (“Distributor”).

The appointment of distributors can be done either by (i) a principal (producer principal or  supplier principal based on approval from a producer principal); or (ii) foreign investment companies operating in the trading sector as a distributor or a wholesaler (“Foreign Investment Companies”); or (iii) representative offices of foreign trade companies (“Rep. Offices”).

MT Regulation 11/2006 defines a producer principal as an individual or business entity in the form of a legal entity or non-legal entity, having its status as a producer which appoints other business entities as an agent, a sole agent, a distributor or a sole distributor to sell goods resulting from the principal’s producing goods and/or services owned or controlled. Meanwhile, a supplier principal means an individual or business entity in the form of a legal entity or non-legal entity appointed by a producer principal to appoint another business entity as an agent, a sole agent, a distributor or a sole distributor in accordance with the authority given by the producer principal.

The appointment by a producer principal or supplier principal shall be conducted in the form of an agreement legalized by a public notary and obtaining a statement letter from a trading attaché or officials of representative offices of the Republic of Indonesia in the principals’ countries. Meanwhile, the appointment by Foreign Investment Companies and Rep. Offices shall be conducted in the form of an agreement legalized by a public notary and shall secure written approval from the represented producer principal abroad.

Any Distributor that enters into an agreement with a principal of goods or services produced abroad must be registered at the Ministry of Trade to secure a registration identity letter (Surat Tanda Pendaftaran/”STP”). The Distributor that has already secured an STP can appoint sub distributors, and such sub distributors shall be registered as well with the Ministry of Trade to secure STP.

Registration Identity Letter / STP

MT Regulation 11/2006 defines that an STP is evidence that the company has been registered as an agent, sole agent, sub-agent, distributor, sole distributor or sub distributor of goods and/or services which are issued by the Director of Business Development and Corporate Registration of the Ministry of Trade (“Director of BD”).

In obtaining an STP for a Distributor, the appointed Distributor (hereinafter referred to as “applicant”) shall submit an application form (“Application”) to the Director of BD. The Application for registering the Distributor of goods and/or services produced abroad shall include the following documents:[3]

a.       An agreement that has been legalized by a public notary and statement letter from the trading attaché of the Republic of Indonesia or official of a representative office of the Republic of Indonesia in the principal’s country, by showing the original document;

b.      In case  an agreement is entered into with the supplier principal, the supplier principal is obliged to show the authority from the producer principal;

c.       A copy of a Trading Business License;

d.      A copy of a valid Company Registration Number;

e.       A copy of a valid General Importer Identity Number;

f.       A copy of the deed of establishment of the applicant and/or its amendments that have been approved by a relevant authority;

g.      In the case of a limited liability company, a copy of  legalization as a legal entity from the Ministry of Law and Human Rights;

h.      An original of a leaflet or brochure or catalog from the principal for the goods / services;

i.        A copy of a license or other registration identity from any technical institution which is still valid, for certain types of goods in accordance with the prevailing laws;

j.        A copy of a permanent business license or approval from the Investment Coordinating Board (BKPM) if an agreement is entered into with a Foreign Investment Company; and

k.      A copy of the business of a foreign trade representative office, if the agreement is entered into with a Rep. Office.

Hereinafter, the above documents will be referred to as the “Registration Documents”.

The following table will explain the licenses or registration that shall be obtained from the relevant institutions or authorities related to certain types of goods as referred to in point i above.

Goods	Licenses /Registration
Arms and goods for the needs of the Indonesian Military / Police	A Certificate of Member of Security and Defense Supplier Association (ASPERDIA HANKAM)
Explosives	A recommendation from PT Dahana, a State Company
Vehicles	A  Motor Vehicle Type License from the Ministry of Industry
Beauty care apparatuses and medical care apparatuses	A registration identity or license from the Ministry of Health
Medicines and food and beverages	A registration identity or license from the Food and Drug Supervisory Board (BPOM)
Telecommunications apparatuses or devices	Certification and labeling from the Directorate General of Post and Telecommunications
Measuring, weighing instruments and their appliances	A registration Identity from the Directorate of Meteorology at the Ministry of Trade
Lubricant oil	A registration identity / certification from the Ministry of Energy and Natural Resources
Pesticides	A pesticide certificate from the Pesticide Commission or Ministry of Agriculture

The validity period of an STP as a distributor of goods and/or services produced abroad, which is appointed by producer principals is 2 (two) years unless otherwise stipulated as being less than 2 (two) years in an agreement or confirmation.

If the Distributor plans to extend the period of an STP, then the Application shall be submitted to the Directorate of BD by enclosing the Registration Documents along with the following documents:

a.       Confirmation from the principal, already legalized by a public notary or certificate from the trading attaché of the Republic of Indonesia or official of a representative office of the Republic of Indonesia in the principal countries, by showing the original documents;

b.      The applicant’s activity report every 6 (six) months; and

c.       The original of the STP that is being requested to be extended.

The Distributor who holds the STP is obliged to submit its activity report every 6 (six) months to the Director of BD.  If the Distributor is no longer undertaking its business activities  or dissolves its company, then the Distributor shall submit a closure report and return the STP to the Director of BD. Further, if there is a change to the name of the principal, status of appointment of distributorship, brand, marketing area, type of goods, and address of the company, then the person in charge of the company is obliged to report the change to the Director of BD.